Lobby payments: How the Central Bank

goldmine was plundered

American influence peddler registers his deals only after exposures in the Sunday Times and Foreign Policy
Magazine

By N

amini Wijedasa-Sunday, September 27, 2015

For three consecutive years, the Auditor Generals Department queried the Central
Bank of Sri Lanka (CBSL) about the millions paid in fees to foreign lobbyists,
consultants and public relations agencies.
The reports for 2013 and 2014 will be published within weeks, when
they are tabled in Parliament. The Auditor General first raised concern
in 2012 after noticing that the CBSL had advanced money to these
firms when it should have been routed through other channels. But this
observation was omitted in that years final report.
The Central Banks income statement for 2014 places accumulated
Imaad Zuberi

costs for advertising, consultancy, communication, advisory and

professional fees at Rs. 2,050,619,000 or more than Rs. 2 billion.

In 2014 alone, Rs. 1,396,223,000 nearly Rs. 1.4 billion was spent. The regulator
neither defended nor justified the figures.This was observed by Weerakoon
Wijewardena, who retired from the CBSL as Deputy Governor. The sums are not
itemised.
But they did include payments to Dominique Strauss-Kahn, the International Monetary
Fund (IMF)s scandal-hit former Managing Director who was hired as Advisor to the
CBSL. The actual figure is much larger.

The Central Bank became the preferred channel for such payments because its
accounts do not go before Parliament.
The irregularities are usually revealed many years after the event, explained Mr.
Wijewardena. For this very reason, the Central Bank is a goldmine for any politicallyoriented person to exploit for his political
masters.
The Treasury or any other Ministry would
have needed Parliaments permission to
make such large outlays. So the Central
Bank conveniently became the main
disburser, with the politically-appointed
Monetary Board acquiescing. Parliament
and Cabinet were circumvented. In the
case of most payments, the External
Affairs Ministry was also bypassed.
In 2014, the bulk of disbursements skirted
the Sri Lanka mission in Washington, DC.
(The lobbyists and PR companies were
predominantly American).
Even after extended research into the
former Governments dalliances with
these companies, it was a challenge to
determine just how much had been spent.
Transfer records of some payments are
unavailable.
Former Central Bank Governor Ajith
Nivard Cabraal has covered his bases.
The paper trail shows him to be obeying instructions from Sajin de Vass

Gunawardena, former Monitoring MP to the Ministry of External Affairs and former

Presidential Secretary Lalith Weeratunga.
The latters signature is on many documents, including the controversial contract with
Imaad Zuberi, a US influence peddler. The Monetary Board of the Central Bank is
represented in paperwork by two Deputy Governors.
Mr. Zuberi filed his registration papers in keeping with the US Foreign Agents
Registration Act (FARA) only on September 9, this year about a week after the
Sunday Times and Foreign Policy, a US publication, featured articles about massive
fund transfers from the CBSL to his personal account and to WR Group, a company
he set up in July 2014.
It is also a full year since his Sri Lankan experiment was suspended. Under US law,
however, it is mandatory to register within ten days of agreeing to become an agent
and before performing any activities for the foreign principal.
According to documents traced by the Sunday Times, Mr. Zuberi got an initial tranche
of US$ 3,500,000 to his personal Bank of America account in May last year. It was for
Settlement of invoice per contract-Sri Lanka project. He received a second payment
of US$ 1,000,000 to his account in June last year.
The third installment of US$ 1,000,000 was made to the WR Group on July 17, 2014,
just three days after it was incorporated. A final tranche of US$ 1,000,000 went from
the Central Bank to the WR Group in September, 2014. That is a total of US$ 6.5
million. None of these facts would have come to light without media exposure.
In his FARA filing, Mr. Zuberi admits to having received US$ 4.5 million from the Sri
Lankan Government through the CBSL. He says it was for business consulting
services, including non-specified amount for public affairs.
He has charged expenses for airline tickets, hotel stays, food and related travel
expenses, including visits to Sri Lanka. He claims to have paid US$ 581,500 to two
companies Beltway Government Strategies and Nelson Mullins Riley &

Scarborough which he subcontracted.

On paper, Mr. Zuberi shows no connection to the WR Group. But he says he provided
funds to Beltway pursuant to the agreement between the WR Group and the
Government of Sri Lanka. The relevant contract is attached.
The WR Group made its own FARA filing only ten days ago. It is signed by Mark
Skarulis, a business associate of Mr. Zuberi. It makes no mention of Mr. Zuberi .
It says Mr. Skarulis is the companys only partner, officer, director, etc. And it offers a
lengthy explanation when asked to disclose its doings on behalf of Sri Lanka, the main
premise of which is: Most activities under the attached contract are not reportable
activities.
The contract is signed by Mr. Weeratunga in his official capacity as Secretary to the
President. It reveals an interesting discrepancy. Mr. Skaruliss FARA filing says the WR
Group was incorporated in Washington, DC, on July 14, 2014.
But the contract plainly states that it is a Delaware limited liability company based in
Los Angeles, California. Delaware has long been called the shell corporation capital
of the United States.
The four-page document is revelatory in other ways. It divulges that Mr. Zuberis and
the WR Groups deal with entities in Sri Lanka it is difficult to say who was even
beefier than earlier thought.
The total fee was to have been US$ 8.5 million over six months! The Government
through the Central Bank had agreed to pay a first installment of US$ 3.5 million
followed by five tranches of US$ 1 million each. Both filings and contract are bristling
with jargon. There is ambiguity in almost every line.
Take, for example, this sentence: Contractor agrees to provide consulting and
research services and/or other related services to The Government of Sri Lanka and to
The Central Bank and other instrumentalities of the Government of Sri Lanka and

agreed to by Contractor in advance and in writing.

The Contractor will offer strategic advice related to commercial and public policy
considerations related to the US and other parties.
It will also contribute towards identification of consultants or other legal or non-legal
advisors to The Government of Sri Lanka and to The Central Bank as may effectuate
Sri Lankas commercial and diplomatic objectives (whatever that means).
There would, however, be no lobbying.
The contract expressly states: Contractor shall not engage in lobbying activities or in
any representation or support activities that involve lobbying activities or the payment
of any monies, without prior authorization by Manager. It is poorly drafted throughout.
The WR Groups registration says the company received US$ 2 million from the
Government of Sri Lanka (executed by the Central Bank of Sri Lanka) for business
consulting services, including non-specified amount for public affairs consulting
services.
It then paid Beltway Government Strategies US$ 78,500 for public affairs consulting
for GOSL. The head of Beltway is also Mark Skarulis.
There is no record of whether any of these lofty goals were achieved. The dodgy
business relationship between Mr. Zuberi and the Sri Lankan government does not
seem to have endured beyond September 2014 just four months after it began.
But FARA data shows the WR Group and Mr. Zuberi to be active registrants, or that
they continue to work for Sri Lanka.
Anyhow, the former Central Bank Governor must be thrilled to see his name printed in
Mr. Zuberis FARA filing.
Asked the name of officials with whom he deals, he provides: Lalith Weeratunga,
Principal Secretary; Nivard Cabraal, Governor.

Despite controversy, hiring of lobby firms continuesPMs office paying US 25,000 a month
to PR company
By no means was the Mahinda Rajapaksa administration unique in enlisting
foreign lobbyists, consultants or US public relations companies. The Foreign
Agents Registration Act (FARA) database shows that one of Sri Lankas
earliest contracts was with the Tea Council of the United States of America,
Inc.
That deal was signed in 1965 to promote tea consumption in the United
States. India and Indonesia were co-signatories. It continued until 1997
with the Sri Lanka Tea Board. In 1973, the Ceylon Tourist board signed up
Tribune Films, Inc. This was to distibute 16mm, sound motion picture films
on Sri Lanka tourism around the US on a free-loan basis. It lapsed in 1986.
In 1980, the Greater Colombo Economic Commission Chairman Upali
Wijewardene engaged Burson-Marsteller to perform selective public
relations functions consisting principally of arrangements for interviews by
the news media, speaking platforms for GCEC officials and a series of
seminars for banking and industry officials.
That ended in 1981. Between 1982 and 1998, Government entities hired
six other firms.
In 2002, the United National Party was in power. Ranil Wickremesinghe was
Prime Minister and Chandrika Kumaratunga President.
The Government signed a contract with the London-based Bell Pottinger
Communications Ltd which, in turn, hired a reputed firm called MWW Group
to provide information and assist in contacting Government officials
regarding US-Sri Lanka bilateral relations.
In 2003, the Embassy of Sri Lanka in Washington, DC, employed Sandler,
Travis & Rosenberg, PA; Patton Boggs; and Daniel J. Edelman, Inc. No new
contracts were entered into between 2003 and June 2008.
From 2008 onwards, there was an avalanche of agreements. It reached a
peak between April and November 2014. A small group of decision-makers
enlisted several firms and some Congressional aides to provide various
services to the Embassy, the Central Bank and, apparently, the
Government.
Among them were companies of high repute, such as Patton Boggs or
Nelson Mullins Riley & Scarborough. The first is an international law firm
with 44 offices in 21 countries. It is also the foremost lobbying company in
the US.
That agreement lasted from 2009 to 2013. Patton Boggs successfully
defended Mahinda Rajapaksa, the then President, in litigation filed at the

US Federal Court in Washington, DC.

Patton Boggs was paid US$ 35,000 a month. Insiders say substantial work
was done for that fee, including keeping Sri Lanka off the sanctions list of
the US Trafficking in Persons Report (it remains on the watch list).
The company lobbied for higher development and other aid from the US to
Sri Lanka. It supported the Government when the US tabled a resolution at
the UN Human Rights Council in Geneva.
Nelson Mullins is also of high repute and has around 600 lawyers
worldwide. It continues to be retained by the Embassy in Washington for
the work it does.
It was observed in an earlier article that this company had received a US$ 4
million payment from the Central Bank but had not declared the full
amount in its FARA filing.
US-based sources said the difference was likely to be fees for legal work.
Business development and legal work are paid differently and filed in
FARA, one of the sources said, requesting anonymity.
Things became messier when the Central Bank and the Office of the
Monitoring MP of the Ministry of External Affairs started taking on more and
more firms. The potential for duplication of services was high.
The companies included Thompson Advisory which paid out a large amount
of money to a Sri Lankan limousine driver called Thilak Siriwardana.
The quality of the work at the Embassy was part of the reason why there
were a lot of people hired to write speeches and do things that are very
basic, the source said.
There were probably people capable of doing them at the Ministry but they
were not necessarily at the Embassy.
Some countries use lobbying quite effectively. Japan is one of them. It
employs just two lobbyists one for the US Democrats and one for the
Republicans. India is the same.
This way, you get a breadth of the relationship, the source
explained. FARA data show that Sri Lanka still have four companies on its
payroll.
In April this year, the Office of Prime Minister Ranil Wickremesinghe hired
Sorini, Samet & Associates at US$ 25,000 a month. Nelson Mullinss
contract continues from last year.

Curiously, Mr. Zuberi and the WR Group are also on the list. Perhaps they
are waiting for the remaining two million that the Government owes them.
Posted by Thavam